Public expenditure cuts will be real and deep. They will start this year and continue for the remainder of this Parliament. The emergency Budget and the Spending Review later this autumn will only reaffirm these realities.
Local government should expect to bear more than its share of these cuts given the new government’s commitments to ‘protect’ a range of services and their budgets. Revenue and capital funding is at serious risk, and rather being comparable with the reductions of the 1980s, these cuts will be considerably more severe.
This all sounds very gloomy and one could be forgiven for being very pessimistic. A range of new initiatives and pet projects will be stopped. There will be significant redundancies just as the economy begins to move towards small but sustained growth. There will be pain and the risk of more pain to follow. It will not be surprising then if local government and other public sector leaders – politicians, non-executive directors and executives – feel that there is little that they can do apart from making tactical and urgent cuts, whatever the long-term consequences.
The picture is gloomier still. The duty of care to citizens and communities remains, irrespective of the levels of funding available. Indeed the public’s demands for public services will only increase over the years ahead as a consequence of demographic change and because we have been conditioned to expect ever rising standards of service and responsiveness. Local authorities and their local partners in the public, third and business sectors are about to face incredibly hard choices and tough decisions.
So what is to be done? Local authorities have four factors in their favour:
- local government is to be given the power of general competency, which is to be welcomed, and it will retain its duty of community leadership and place shaping;
- traditionally, local government has demonstrated resilience to cuts and financial pressures;
- The Total Place pilots and parallel projects have shown that there are significant opportunities across a range of services to focus on outcomes for users and communities, ignoring current institutional and professional boundaries, and in so doing to eliminate duplication and unnecessary expenditure whilst improving or at least sustaining performance;
- local government has a democratic legitimacy that no other local agency shares.
The new government has yet to say how it will take Total Place forward but it would be very bizarre if it did not promote its application and extension, even if under a new brand and with some adjustments to the details proposed by the former government at the time of this year’s Budget. The new government is likely to support a model of governance and service organisation that can achieve efficiency savings and in the longer term, service redesign that significantly reduces costs. Local government and its partners needs to tell government now that they are ready to rise to the challenge of taking Total Place (or whatever it becomes known as) forward. There is a deal to be struck.
The new government needs to embrace ‘localism’ and make a reality of it
Local government and its partners should argue that given there will be less money in the system available to support local service delivery (perhaps as much as 20% or more in some service areas and for some agencies), they should have much more discretion of how public money is spent in their areas. There should an assumption of no or minimal ring-fencing of monies allocated by central government to localities and in those (hopefully rare) policy or service areas where there is some national direction, this should agreed following consultation with local government and others. This means that local decisions should be able to be applied to certain aspects of the welfare budget – presumably not core benefits but certainly worklessness programmes and local administration. The same should apply to NHS and other budgets. The government is committed to localism and to decentralisation – it now has the opportunity to practice what it claims.
The vital leadership role of local government
In order that there is a rational approach to the allocation of devolved finance, principal local authorities, as the bodies with a local democratic legitimacy, should be given the duty to lead place-based strategic commissioning. This will involve understanding and listening to the views and choices of local people and local businesses in order to set high-level outcome targets as well as allocating resources to specialist agencies to undertake more tactical commissioning. Local authorities will be accountable for the allocated monies and accountable for performance to local communities. There will need to be agreed accountability relationships between these principal local authorities and central government for the stewardship of the devolved monies, but the latter should not be involved in the detail of local decisions save where there are national standards to be applied.
‘Real’ and meaningful partnerships – or this will end in tears
Local authorities will need to work speedily, effectively and above all ‘in good faith’ with their local partners to develop partnership models that best enable them to fulfil these new powers and duties. This may be through enhanced Local Strategic Partnership arrangements, or through public service boards, or in some other way. There may also be a variety of partnership arrangements to drive change in particular service or geographic areas – why would every local agency need to be involved in every service area – this is both inefficient and confusing.
There will be some tough decisions to be taken, including stopping some services and delivering others on a very different basis – maybe with user charges or with an expectation that individual or collective groups of users will contribute themselves to the delivery of the service. These are important matters and decisions that should be determined locally with the decision makers being accountable to local people. They also have to be taken on an inter-agency basis so as to avoid unintended consequences somewhere else in the public service system. This is also likely to mean a new and enhanced role for the third sector too.
Behaviours and mechanisms will either drive or kill these partnerships
Progressive local partners will wish to consider behaviours and mechanisms to:
• understand and respect that their different partners will face different duties and demands
• redesign services across institutional boundaries
• be unconstrained by egos, orthodoxy, vested interests or existing practice
• share resources, property, systems and processes wherever possible
• align strategies, and align and pool budgets to focus on maximising outcomes
• redeploy staff whose jobs are at risk across agencies where this is feasible
• consult honestly and in good faith so that no major decisions are taken which adversely impact on another partner without prior dialogue
• co-ordinate strategic budget decisions so as to avoid disproportionate adverse impact on any individual community.
There is a deal to be struck between local government and the national government
Local government has to recognise that there is a ‘quid quo pro’ here. In return for greater powers, it must recognise the wider aspects of the government’s policies and objectives, and the drive towards personalisation and choice. Accordingly, it should look to transfer decisions and funding downwards to neighbourhoods and to individuals as part of the deal.
Concurrently, local government and its partners have to extract some agreements from central government if this deal is to work. These should include a pledge that all Whitehall departments and ministers will commit to:
• the same approach across government and facilitate decentralisation
• new forms of local area agreements which are about how central government is going to support local decisions and not how local authorities are going to implement national policy goals – which would be turning the current LAA system on its head
• allowing local areas to set most performance targets – though recognising that a few may be set nationally after consultation
• relaxing the performance and inspection regimes to align them across agencies and to reduce the burden on local bodies – though central government or the public sector community itself would need to retain reserve powers to intervene in the case of catastrophic failure
• set single capital allocations for localities and enable the establishment of local public estate trusts and companies that create a single estate for a locality
• being willing to let go and to celebrate local choice rather than to moan about ‘post code lotteries’
Public sector leaders need to move from being transfixed by the oncoming headlights and try and get into the driving seat
The challenges are enormous. There will be pain. There will be cuts. However, local leaders have an opportunity to seize the initiative and to negotiate a new settlement between Whitehall and town hall. There is an all too brief window of opportunity – action is required now!
John Tizard is director of the Centre for Public Service Partnerships (CPSP@LGiU)
